Thursday, December 22, 2016

The usual howls and wails of emotive knee-jerk reaction have come from Kiwirail's announcement to stop operating electric locomotives on the Main Trunk line.

It would cost NZ$1b to extend electrification to the Auckland network, and to Wellington. However, Wellington's network is electrified to a different voltage and on DC not AC, so dual-voltage locomotives would need to be bought. Even then, many of the trains on the line, going to and from branch lines (such as to the Bay of Plenty, Taranaki and Hawke's Bay) would still be operated by diesel.

However, the North Island Main Trunk electrification has always been a dud project since Rob Muldoon made the NZ Railways Department (NZR) embark on it as part of his Think Big central planning programme.

Main Trunk electrification was considered in the 1950s, after the line north of Wellington was electrified when it was deviated from what is now the Johnsonville line and placed in two double-track tunnels, so that trains were already operating electric from Wellington to Paekakariki (as steam locomotives couldn't run through the over 4km long Tawa Flat Number Two tunnel). A set of electric locomotives were bought that could have served on the main trunk (and were the most powerful locomotives in NZ until 1972), but spent their lives almost entirely dedicated to operating the Wellington to Paekakariki trains (until tunnels on the line north of Pukerua Bay were lowered to enable diesel to run all the way through).

However it was rejected and the decision was made to go diesel, not least because the government owned railways was conservative technically, and was not keen to adopt what it thought then was the "risky" AC electrification system (being widely rolled out in Europe, but not yet used in New Zealand). The DC system used in Wellington, Christchurch and Arthurs Pass was going to be too expensive, so diesel locomotives were bought to phase out steam.

The Think Big project came from an age when NZR had a general statutory monopoly on moving freight further than 150km. NZR was facing delays on the main trunk line because of growing export traffic. The problem, as it saw it, was a lack of capacity. Its solution was to upgrade the line, bypassing several bottlenecks with shorter deviations, new viaducts able to take heavier trains and some steep winding sections avoided, but also to electrify the line between Palmerston North and Hamilton. Why not to Auckland and Wellington? Because the bottleneck was in the middle, and the way NZR operated meant that many trains were broken up and shunted along the route at Hamilton and Palmerston North.

This was also an age with guards vans, with lots of small stations and sidings, as NZR's monopoly on long haul freight meant it handled small consignments of single wagons or even box loads. Towns like Paraparaumu, Otaki, Hunterville, Otorohanga and Huntly had shunting locomotives to handle freight, like they always had.

In short, NZR ran an old fashioned, inefficient railway, handling consignments better suited to trucks, and its solution to its congestion was not to propose competition (naturally), but an expensive grandiose engineering based solution.

Yet the Muldoon Government wasn't completely economically illiterate. Main trunk electrification was committed, and would end up costing $350m in 1990 prices, but in 1982 NZR was converted into a corporation, effectively becoming the first SOE. It would be required to make a profit, was no longer subject to political direction (except a Ministerial veto on closing lines) and would be subsidised directly for services that were unprofitable that the government required it to operate.

In 1983, Minister of Transport George Gair opened up domestic freight transport to competition, abolishing the 150km limit on road freight competition. In 1984, a major consultancy report by Booz Allen Hamilton for the Railways Corporation made major recommendations for it to be competitive and profitable with competition from road freight. This included closing two workshops, removing guards vans, closing small stations, moving from handling small lots of freight to trying to handle multiple wagon and train loads of freight.

The Railways Corporation reformed, but it still lost freight to road competitors over many years. In 1987, it commissioned Coopers & Lybrand to assess whether the main trunk electrification (that it was required to complete) could be an asset. The report concluded that even if electricity were free it would still be a net loss to the Railways Corporation annually. The only part of the project that made sense were all of the deviations.

As a result, when the Railways Corporation was restructured into a full SOE, it received $350m from taxpayers to bail it out of its Think Big project (after all the others were). Officially, the Main Trunk Electrification had no net value that could ever be recovered from users of the line.

In short, the main trunk electrification has ALWAYS been a dud.

After 30 years, the locomotives have become unreliable, many of the trains that now operate on the line have little operational need to be stopped at Hamilton and Palmerston North to change locomotives, wasting time, labour and fuel.

A project that was inspired by technocrats running a monopoly, decided by politicians engaging in Soviet style central planning, has come to its natural conclusion.

It's not worth spending NZ$1b to incrementally reduce CO2 emissions, which will make no more difference to climate change than stopping a child urinating in a lake will stop it being toxic.

Yet that wont stop the hyper-emotive railevangelist central planners making every hyperbole about this being some giant leap backward. The Otira-Arthurs Pass electrification was closed in 1997 once technology enabled diesel locomotives to run all the way through from the West Coast to Canterbury, the Christchurch-Lyttelton electrification was closed in 1970, as equipment was due for replacement and with the age of steam coming to an end, it could be dieselised.

Is it a shame that such a large project has proven to be not worthwhile? Absolutely, but it wasn't Kiwirail's fault, but the fault of the central planners of the Muldoon era - those the Labour Party and the Greens now ache to emulate, who chose to waste hundreds of millions of taxpayers money solving a problem that existed because of their regulation and archaic business practices it protected.

Kiwirail is a marginal operation at best, it doesn't need to have around its neck the vanity proposals of politicians who think they know best, and who think that saving every tonne of CO2 is worth unlimited amounts of taxpayers money.

Note though how odd it is, that the Greens, who all claim to care about CO2 emissions, continue to oppose foreign ships on international trips carrying domestic cargo as they travel between NZ ports. This has next to no impact on CO2 emissions, as the ships are sailing anyway, by using spare capacity on the ships to carry freight within New Zealand.

Why? Because the Seafarers Union doesn't like the competition. The bottomline is that the Greens prefer even socialism to reducing CO2 emissions.

Thursday, December 15, 2016

Syria's hereditary socialist/nationalist (Ba'athist) dictatorship has flagrantly used chemical weapons against its own people and dropped barrel bombs on them, for daring to oppose 46 years of repressive family rule. Nobel Peace Prize winner, Barack Obama, said the use of chemical weapons would be a "red line", then did nothing besides let Assad (and his father) 's ally Russia "supervise the destruction" of the weapons.

Obama, leader of the world's only superpower, then did nothing. His excuse was that the UK House of Commons had voted against military action against the Assad regime (which it did, as now former leader Ed Miliband wanted to prove how much the "anti-Blair" he was and burnish his leftwing credentials). Non-intervention, the preferred policy of rightwing isolationists and leftwing "pacifists" is the new norm, except for Russia.

Of course it isn't pure non-intervention. The West has been funding and arming some of the rebel groups in Syria, including those with Islamist leanings. They aren't ISIS (despite some claims), but there are no angels in Syria. No one is fighting for Syria to be a secular liberal democracy that respects individual rights and political plurality.

The surrender of Aleppo to the Assad dictatorship was the inevitable outcome of Russian intervention in favour of its long standing ally and the flagrant ongoing violation of international law by the Assad regime in using chemical weapons and barrel bombing civilian areas.

Chemical weapons and indiscriminate bombing by the Assad regime has worked. China, Russia, Iran, all of which execute political opponents, don't care. The part of the international community that should care (the "West") has shrugged, said lots, but Obama handed over responsibility to Russia. This was like handing over responsibility for addressing North Korea's human rights atrocities to China.

The experience of Iraq - successfully overthrowing tyranny, followed by utter failure in replacing it and achieving control of the country, rightfully gave cause for caution.

However, the result of that vacuum has been to give Russia an opportunity, to be the new power in the Middle East. There were opportunities to contain Assad's use of chemical weapons and air power over civilians, with no fly zones, but doing anymore would have been much more difficult.

Now those on the left are complaining that "we" sat by and did nothing, yet that is exactly what they campaigned for. Dictators will murder opponents, will slaughter civilians and unless you are willing to put our own taxpayers' money and military force to intercede, it will continue. Obama in 2011 said Assad either had to lead a transition to democracy or get out the way, but he did neither - he fought on, gained support of his strong ally - Russia - which already knew the West was going to do nothing.

The isolationist right of course also believed in leaving Syria alone, a few because they accepted Assad's propaganda that all his opponents are "terrorists" and all his opponents are "Al Qaeda and ISIS" whereas he is moderate and reasonable. A few because they see Putin as a "friend". However, mostly because they have no interest in what happens to people in foreign lands, as they are far away places of which they know little. Syrians wanting freedom from tyranny should do it themselves, and not expect foreign government support (even if it means foreign governments actively support the tyranny). At least that position has a consistency - governments should only defend the rights of those within their boundaries, even if other governments engage in mass slaughter that sends hundreds of thousands fleeing to other governments.

So Aleppo is awful. Yet, it is the end result of the policies of both leftwing so-called "peace" supporters and rightwing isolationists. The biggest threat to the lives of individuals are tyrannies, and the only way to redress that is to arm opponents or to take them on yourselves. The Western appetite for this is slim indeed.

Sunday, December 04, 2016

Because Taiwan is, de facto, a separate country, but the mainland wants to keep up the pretence that it is entitled to do violence to it at any time if it so wishes.

It is the only a part of China that is not governed by the Communist Party of China (the People's Republic of China (PRC) because the Communists didn't manage to take over Taiwan and a handful of islands off of the mainland coast at the end of the Chinese Civil War. The effect was that the previous government of China, the Republic of China (ROC), "temporarily relocated" its capital from Nanking to Taipei, with the Kuomintang (Nationalist Party) putting Taiwan and other islands (Kinmen, Penghu and Matsu Islands and some others) under its control in a state of emergency for over forty years.

The effect was not dissimilar to that of the two Koreas, except the two Koreas are of roughly equal geographical size and at one time similar GDPs (indeed the Republic of Korea "south" was poorer than the Democratic People's Republic of Korea "north" until the late 1960s).

So as mainland China suffered under the jackboot of Chairman Mao for nearly thirty years, and lost tens of millions to executions and starvation, and stagnated, Taiwan was under the less brutal jackboot of Chiang Kai Shek for a similar period and became a rapidly developing industrial country. Of course since Mao died, China embraced corporatist capitalism and its economy has grown much like Taiwan did since the 1950s, but Taiwan also reformed although spent many years under tough authoritarian rule. In 1969 the first legislative elections were held to have representatives of Taiwan elected (all others were legislators who were elected before the end of the civil war representing Chinese provinces under "occupation" by the communists). As those legislators passed away they were not replaced so by the 1990s, the entire legislative assembly was subject to competitive elections. Martial law was ended in 1987 by Chiang Kai Shek's successor and son Chiang Ching-kuo, as Taiwan moved to being a fully fledged liberal democracy. By 1992, remaining mainland representatives were removed so the entire legislative assembly was subject to competitive elections.

Taiwan, as such, is a role model for China as an open, relatively free, liberal democracy, with rule of law, capitalism and political power tempered by the separation of powers. This, of course, is a complete anathema to the Chinese Communist Party and the People's Republic of China.

Of course, Taiwan (or rather the Republic of China in Taiwan - remember Made in R.O.C. labels on goods made a few decades ago?) has had an interesting history of international relations. With the exception of the UK (primarily out of concern of Hong Kong), most Western countries did not recognise the Communist takeover of China immediately. Australia and New Zealand did not until 1972, and even the United Nations seat for China was held by the Republic of China until 1971, as the United States vetoed the Chinese Communist regime (as it was called) from taking its seat despite strong efforts by friendly communist countries and developing countries lobbying on behalf of the PRC. Albania became Beijing's biggest champion. Both Beijing and Taipei regimes rejected each other being represented on the UN, but the US pushed for the PRC to be represented, not least because it seemed absurd that the world's most populous country (and a nuclear power) were not represented. So the PRC was admitted, and the ROC expelled. In 1979, the US switched recognition from the ROC to the PRC, but gave Taiwan a military security guarantee, as the PRC had always (and still does) reserve the right to reunify Taiwan by force.

Both Chinese regimes refused to have diplomatic relations with any country that recognised the other, but the ROC on Taiwan dropped this in the 1990s, as it had lost recognition and embassies with almost all countries as few could refuse the commercial, diplomatic and strategic benefits of having good relations with mainland China. Once Saudi Arabia (which had resisted the PRC because of its atheism) and South Africa (which shifted recognition not long after the end of apartheid) had dropped Taiwan, the ROC would only retain diplomatic relations with small Pacific Island, African or Latin American states, mostly through aid programmes (although this ended in 2000 as the PRC was able to outbid the ROC).

So Taiwan remains an oddity. In every de facto sense, it is an independent country, with a military, government and informal diplomatic relations with many countries. However, the PRC stops it from having formal diplomatic relations because it doesn't like the only part of China it didn't win in the civil war having a parallel status to it in international organisations or bilateral relations. It claims that to do so would imply there are "two Chinas", which of course there are as there are two Koreas, and were two Germanys and two Yemens (and even two Cypruses) regardless of claims of legitimacy.

So Donald Trump accepting a phone call from the democratically elected President of the ROC should not be a big deal, except for Beijing, it ruffles their sensitivities over reality. The US has a defence treaty with Taiwan, and should make it clear than any attack on Taiwan will be rebuffed by the US. The ROC on Taiwan shares the values of the United States and other Western democracies, the values of freedom, individual rights and government that is determined by the consent of the governed. The fact that this concerns the Chinese Communist Party is good, for it could do much worse than look at Taiwan and see an example of transition from one-party authoritarian rule to vibrant vigorous liberal democracy. Peace between Taiwan and the mainland is critical for both, so I think there is little real risk of any aggression from the PRC, but it should be clearer than that. A renewed US commitment to Taiwan because of its values.

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About Me

Life, liberty and the pursuit of happiness. Politics, philosophy and economics from a pro-capitalist, libertarian, objectivist perspective. Born in New Zealand, live in the UK, career has been in transport, telecommunications and infrastructure policy.